eSports Media Evolution: Yahoo and ESL


TNL Take: How you'll watch eSports is rapidly changing.

This is happening so quickly that today kicks off the first of three parts this week on the eSports Media Evolution.


eSports Media Evolution: Part 1 (Infographic: The Next Level)




This Friday ended with news of a two year partnership between ESL and Yahoo eSports - or to view it from a pure monetization perspective; ESL and Verizon/AOL/Yahoo/Xbox.

Yahoo Esports is starting this relationship with ESL to distribute their content across Yahoo's platform; although it will go definitely go much deeper than that.

The key tidbit was this part of the press release:


"Yahoo and ESL will collaborate on the development of new tournaments to be covered and distributed by Yahoo, with new exciting integrated sponsorship opportunities for advertisers"


Whether Yahoo was the right partner for ESL is a fair question.

I think more importantly this shows how badly ESL needed Yahoo - rarely has anyone said recently how important Yahoo could be to someone else.

Here's why.


/01 The Dumbbell Theory of Media

I'd like to go deeper on this at some point but basically it's what I refer to as The Dumbbell Theory Of Media. Put it simply, over the past few years we've seen the Media landscape evolve into two power centers:


Distribution and Content


The Kings of Media may have always been this way but new companies have tried to play in the middle; be both Distribution and Content.  

This doesn't really work - although Vice maybe an exception.


As companies no longer can survive in the middle, the power shifts to either side of Distribution or Content or what looks like a dumbbell.

The Dumbbell Theory Of Media (Graphic: The Next Level)

One of the biggest things missing for ESL was their own distribution. I've mentioned before the challenges of being mainly a league/event company.

While Twitch was ESL's primary distribution vehicle for a while you could start to see that relationship fraying this year.

Back in March, Twitch announced a partnership with Psyonix to develop a Rocket League Championship Series. This was something that ESL previously handled.

Now with the Yahoo deal and tournament partnerships, you can easily see Exclusive ESL content on Yahoo's platforms in the future.


/02 Ad Sales

This was ESL's second big challenge.

While the company is over a decade old and well established in Europe, it doesn't have the Brand recognition of Twitch or MLG here in the US.

Further they have a relatively small US based Sales team. 

Now couple that with potential marketplace confusion - "Do I buy from Twitch or ESL?" - and this hinders large Ad revenue generation.

This deal instantly eliminates all three issues.

If you don't think that's important, the words "advertiser" or "sponsorship" were used 5 times in the press release.

Now while the release and subsequent press coverage focused on Yahoo eSports moving into original video content and live tournament coverage - which is important - more importantly this provides a huge multi-platform sales opportunity.

OK, sorry for using "multi-platform sales opportunity" because everyone says it but in this case it's fairly vast:


  • Yahoo: Branded content opportunity directly within the eSports section with distribution across the platform


  • AOL: While AOL did shutter gaming site Joystiq, there's further content/distribution opportunity across Engadget, Huffington Post, and Techcrunch



  • Verizon: The biggest one of all. Outside of the obvious Mobile potential, the bigger selling point is a one, unified Sales team


My understanding is that the various Sales teams from the recent acquisitions aren't combined under one "Gaming/eSports" group but that's a fairly easy operational fix.


Ultimately all of the recent large Platform and Media companies entering eSports is good for one thing:


Brands, Agencies and Media Buyers.


Any familiarity with teams, processes and where checks have already been written eases the eSports education that's needed to drive the industry further.

Tomorrow we continue with eSports Media Evolution: Disney

Microsoft Keeps Throwing Money At eSports And It's So Smart


(Photo: Microsoft)

TNL Take: The big headline around eSports currently are prize pools and in the case of the recently announced Gears of War Pro Circuit, it's a cool million.

But the what's the real story behind the new ten-month circuit between MLG, Gfinity and sponsored by Microsoft for the upcoming release of Gears of War 4?

It's an eSports monetization machine for Xbox.

And it’s so smart.

Let's go through why.


/01 Amateurs = Game Sales

Almost everyone I speak to that’s trying to get into eSports looks at it from the Professional angle.

And that totally makes sense if you’re new to eSports and even biased by being involved on the traditional Sports side.

But there’s an opportunity on the amateur side—and especially at the Collegiate level as I covered in The Next Level 008 back in April.

The new Gears of War Pro Circuit is open to both Pro Athletes and amateurs - but you need an actual copy of the game to participate.

Here's an estimate of how much Microsoft can make on this alone:

With just a 1% increase in Game Sales due to eSports, it already covers the Prize Pool with leftover for logistics and marketing. Yes, that's revenue and not profit to Microsoft but that's just one of the revenue streams.


/02 Tournament Structure

Here’s the next smart move.

In order for Amateurs to qualify, they will need to earn "Gears Pro Points" by competing in MLG's regional ladders on their GameBattles platform.

In these matches, players get Gears Points for playing well which then qualifies them for one of the international events.

There’s another revenue opportunity here but currently the entry fees are Free.

That’s not including any potential ancillary benefit that Activision-MLG get from new users to their platform.


/03 Exclusive eSports Maps and DLC

This is something that hasn't been announced and I'm including it to provide a scope on the overall monetization opportunity.

Microsoft could easily sell Gears of War 4 Map packs that are needed for eSports tournaments:

There's another potential million right there.


/04 Global and Regional Events

Outside of two dates in Columbus, which would be expected as the MLG Arena is based there, the interesting part is the international events:


Dec. 17-18, London, UK

Spring 2017, Mexico City, Mexico

Spring/Summer 2017, Paris, France

And another eSports event in Las Vegas in Summer 2017


While there are revenue opportunities via Tickets and Merchandise, events are ultimately a loss leader.

This is a perfect opportunity to use the whole program to not only promote Gears of War but Xbox eSports globally.


/05 Player Donated Prize Pools

You’ve probably seen the headlines of DoTA’s The International 6 recently surpassing a $20M total prize pool this past weekend with the winning Chinese team taking home $9M+ themselves.

Here's what no one mentions - but I'm going to more deeply soon - is that 92% of that $20M prize pool came from players themselves.

Valve contributes $1.6M to the prize pool and has remained the same amount the past few years.

It's super easy: Players buy in-game cosmetic items like an outfit or weapon skin for their character which doesn't help their gameplay at all and a part of that goes to the prize pool.

Microsoft will be hosting an October event where players will be able to buy Gears eSports themed in game content with proceeds going towards the tournament.


Some of that is going back to Microsoft.


/06 Broadcast

Gears of War doesn’t draw big Twitch viewership and I’ve already shown how challenging it can be to get Brands associated with First Person Shooter content, but there should be some minimal revenue from Broadcasts as well. 


And there you have it. 

Now let's see if Microsoft does the same for Halo.

Last season of Halo Championship Series was less than $250K in prize money.